United States v. Amsted Industries, Inc.; Proposed Final Judgment and Competitive Impact Statement, 21286-21298 [07-2087]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 72, Number 82 (Monday, April 30, 2007)]
[Notices]
[Pages 21286-21298]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 07-2087]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Amsted Industries, Inc.; Proposed Final Judgment 
and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act (``APPA''), 15 U.S.C. 16(b)-(h), that a proposed Final 
Judgment, Hold Separate Stipulation and Order, and Competitive Impact 
Statement have been filed with the United States District Court for the 
District of Columbia in United States of America v. Amsted Industries. 
Inc., Civil Action No. 1:07-cv-00710. On April 18, 2007, the United 
States filed a Complaint alleging that the acquisition by Amsted 
Industries (``Amsted'') of the end-of-car cushioning assets (``EOCCs'') 
of FM Industries (``FMI''), a subsidiary of Progress Rail Services 
Holding Corporation, violated Section 7 of the Clayton Act, 15 U.S.C. 
18, and Section 2 of the Sherman Act, 15 U.S.C. 2. The proposed Final 
Judgment, filed at the same time as the Complaint, requires Amsted to 
divest without compensation all FMI intangible assets and all FMI tools 
and patterns used for imparting the shape, form, or finish to EOCCs. 
The proposed Final Judgment also requires Amsted to license royalty 
free and in perpetuity certain Amsted intangible assets and to make 
available all Amsted tools and patterns used for imparting the shape, 
form, or finish to EOCCs. Finally, the proposed Final Judgment requires 
Amsted to release market participants from restrictive covenants, as 
well as to notify the United States of future transactions.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection at the U.S. Department of 
Justice, Antitrust Division, Antitrust Documents Group, 325 7th Street, 
NW., Room 215, Washington, DC 20530 (telephone: 202-514-2481), on the 
Department of Justice's Web site at https://www.usdoj.gov/atr, and at 
the Clerk Office of the Clerk of the United States District Court for 
the District of Columbia. Copies of these materials may be obtained 
from the Antitrust Division upon request and payment of the copying fee 
set by Department of Justice regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, and responses thereto, will be published in the 
Federal Register and filed with the Court. Comments should be directed 
to Maribeth Petrizzi, Chief, Litigation II, Antitrust Division, 
Department of Justice, Washington, DC 20530, (telephone: 202-307-0924).

J. Robert Kramer II,
Director of Operations, Antitrust Division.

United States District Court for the District of Columbia

    United States of America, Department of Justice, Antitrust 
Division, 1401 H Street, NW., Suite 3000, Washington, DC 20530, 
Plaintiff, v. Amsted Industries, Inc., Two Prudential Plaza, 180 
North Stetson Street, Suite 1800, Chicago, IL 60601, Defendant. Case 
No. 1:07-CV-00710. Judge: Bates, John D. Deck Type: Antitrust. Date 
Stamp: April 18, 2007.

Complaint

    The United States of America, acting under the direction of the 
Attorney General of the United States, brings this civil antitrust 
action to obtain equitable and other relief against defendant Amsted 
Industries, Inc. (``Amsted'') to remedy the harm to competition caused 
by Amsted's acquisition of FM Industries (``FMI''). The United States 
alleges as follows:

I. Nature of Action

    1. Prior to Amsted's acquisition of FMI on December 1, 2005, the 
two firms vigorously competed with each other to sell new and 
reconditioned end-of-car cushioning units (``IEOCCs'') to railroads 
throughout the United States.
    2. Amsted's acquisition of FMI has reduced the number of new EOCC 
suppliers from two to one, resulting in a merger to monopoly. The 
transaction also has reduced the number of reconditioned EOCC suppliers 
from three to two. Amsted's acquisition of FMI consolidated 90 percent 
of all EOCC sales in the United States.
    3. The transaction has substantially lessened competition in the 
design, manufacture, and sale of new and reconditioned EOCCs and has 
created a monopoly in the design, manufacture, and sale of new EOCCs. 
As a result, prices for new and reconditioned EOCCs have increased and 
likely will continue to increase, the quality of EOCCs likely will 
decline, innovation relating to EOCCs likely will decline, and services 
currently offered in the EOCC markets have become and will continue to 
be less favorable to railroad customers. The United States, through 
this suit, asks the court to declare the defendant's conduct illegal 
and to restore the benefits of competition that were lost as a result 
of the transaction.

II. Jurisdiction and Venue

    4. The United States brings this action against defendant Amsted 
under Section 15 of the Clayton Act, 15 U.S.C. 25, as

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amended, to prevent and restrain Amsted from continuing to violate 
Section 7 of the Clayton Act, 15 U.S.C. 18, and Section 2 of the 
Sherman Act, 15 U.S.C. 2.
    5. Defendant designs, manufactures, and sells new and reconditioned 
EOCCs in the flow of interstate commerce. Defendant's activities in 
designing, manufacturing, and selling EOCCs substantially affect 
interstate commerce. This Court has subject matter jurisdiction over 
this action and over the defendant pursuant to Section 12 of the 
Clayton Act, 15 U.S.C. 22, and 28 U.S.C. 1331, 1337(a), and 1345.
    6. Venue is proper in this district pursuant to 28 U.S.C. 1391(c). 
Defendant has consented to venue and personal jurisdiction in this 
judicial district.

III. Parties to the Transaction

    7. Amsted is a Delaware corporation with its principal place of 
business in Chicago, Illinois. Amsted's EOCC sales in the United States 
are made through its wholly owned subsidiary, ASF-Keystone. ASF-
Keystone is a Delaware corporation with its principal place of business 
in Granite City, IL. Amsted is a diversified manufacturer of industrial 
components for the railroad, vehicular, and construction markets. 
Amsted's products include a range of railroad car parts, including 
couplers, side frames, bolsters, draft gears, and EOCCs. In 2005, 
Amsted had approximately $2.5 billion in sales. Amsted's EOCC 
manufacturing facility is located in Camp Hill, PA. Amsted's new and 
reconditioned EOCCs are shipped to customers throughout the United 
States and account for approximately $22 million in sales.
    8. Progress Rail Services Holding Corporation (``Progress Rail'') 
is a Delaware corporation with its principal place of business in 
Albertville, AL and is a wholly owned subsidiary of Caterpillar, Inc., 
a Delaware corporation. Progress Rail is one of the largest suppliers 
of new and reconditioned railroad car parts, rail and trackwork 
components, and railroad car repair services to the railroad industry 
in the United States. Progress Rail has manufacturing facilities in 23 
states, Canada, and Mexico. In 2005, Progress Rail had approximately 
$1.2 billion in sales.
    9. Progress Rail's EOCC sales in the United States were made 
through its wholly owned subsidiary, FMI, formerly a Texas corporation 
with its principal place of business and EOCC manufacturing facility in 
Fort Worth, TX. FMI shipped new and reconditioned EOCCs to customers 
throughout the United States. In 2005, FMI had sales of approximately 
$24 million.

IV. The Transaction

    10. On December 1, 2005, Amsted and Progress Rail completed an 
asset swap by which Progress Rail conveyed to Amsted its wholly owned 
subsidiary, FMI. On April 25, 2006, Amsted dismantled FMI by firing its 
employees and disposing of virtually all FMI plant equipment through an 
auction.

V. Trade and Commerce

A. The Relevant Product Markets
    11. All freight cars undergo considerable stress from 
``longitudinal'' forces, or forces exerted along the length of the 
train. During transit, freight cars are subjected to alternating 
longitudinal forces called draft and buff forces. Draft forces are 
pulling forces caused by train acceleration when freight cars are 
stretched or pulled apart. Buff forces are compressive forces caused by 
train deceleration when freight cars are pushed together. Freight cars 
also undergo considerable stress during switching and coupling at train 
depots. In order for a railroad to connect one freight car to another, 
it must collide the cars at significant speed. The impacts sustained 
during switching and coupling, like draft and buff forces, can cause 
serious damage to sensitive cargo inside a freight car.
    12. All freight cars are equipped with some type of energy 
absorption device to mitigate the effects of draft, buff, and coupling 
stresses. The most common device is a draft gear, which provides the 
minimum protection required for safe railroad operation. Draft gears 
rely on friction between two steel plates to absorb and dissipate the 
energy created by longitudinal forces impacting the freight car. 
Another type of device is commonly referred to as an ``elastomeric 
device.'' Elastomeric devices are lightweight and low cost, but they 
are not suitable for all applications as they return much of the 
absorbed energy back into the draft system.
    13. Railroads must use EOCCs, a specialized energy absorption 
device, when transporting sensitive cargos on freight cars. These shock 
absorbing devices use hydraulics (e.g., pressurized nitrogen gas and 
oils) to minimize longitudinal forces by absorbing and dissipating the 
maximum buff, draft, and coupling forces experienced during transit. By 
reducing and absorbing the forces exerted on freight cars, EOCCs ensure 
that sensitive cargo is not damaged during transit. Each EOCC unit 
consists of a piston, shaft, cylinder, end bells, and a rod that 
attaches the piston to the freight car coupler. Each EOCC-equipped 
freight car requires two EOCCs, one at each end of the freight car.
    14. Other energy absorption devices, such as draft gears and 
elastomeric devices, do not provide the necessary level of cushioning 
required by customers shipping sensitive goods on freight cars. EOCCs 
therefore are critical components for freight cars carrying sensitive 
commodities, such as steel coils, automobile products, electronics, 
lumber, and paper products. Railroads and new freight car builders do 
not consider the price or availability of draft gears or elastomeric 
devices when soliciting prices for EOCCs from prospective suppliers.
    15. Though sensitive cargos can be transported by ``intermodal'' 
freight cars with articulated connectors, railroads cannot substitute 
intermodal transportation for freight cars equipped with EOCCs. 
Intermodal freight cars are specially designed railcars that allow 
standard cargo containers to be stacked for rail transport. The cars 
must travel in groups connected by a ``slackless'' articulated coupling 
system. The coupling system transfers longitudinal forces to the ends 
of the intermodal group, protecting the containers from damage. 
Intermodal freight cars with articulated connectors do not provide 
sufficient cushioning for sensitive commodities, cannot physically 
transport certain sensitive commodities (such as automobiles and 
certain lumber products), and are subject to additional costs and 
operational constraints. When soliciting prices for EOCCs from 
prospective suppliers, railroad customers do not consider the cost or 
availability of transporting goods using intermodal freight cars.
    16. Accordingly, railroad customers can use only freight cars 
equipped with EOCCs to carry certain sensitive goods and cannot 
substitute draft gears, elastomeric devices, or intermodal transport 
for EOCCs on freight cars.
    17. Railroad customers use either new or reconditioned EOCCs when 
equipping freight cars. However, customers building new freight cars 
almost always are required to use only new EOCCs in construction. Thus, 
customers building new freight cars would be unable to substitute 
reconditioned EOCCs in building new cars.
    18. Similarly, customers servicing older freight cars that have 
been in service for more than a decade almost always choose 
reconditioned EOCCs because the cost of reconditioned units is 
substantially lower than the cost of

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new units. Thus, customers are unlikely to substitute new EOCCs for 
reconditioned EOCCs for use on older freight cars.
    19. A small but significant increase in the price of new EOCCs 
would not cause purchasers to substitute draft gear, elastomeric 
devices, intermodal cars, or reconditioned EOCCs so as to make such a 
price increase unprofitable. Accordingly, the design, manufacture, and 
sale of new EOCCs is a separate and distinct line of commerce and a 
relevant product market for the purpose of analyzing the effects of the 
acquisition under Section 7 of the Clayton Act and Section 2 of the 
Sherman Act.
    20. A small but significant increase in the price of reconditioned 
EOCCs would not cause purchasers to substitute draft gear, elastomeric 
devices, intermodal cars, or new EOCCs so as to make such a price 
increase unprofitable. Accordingly, the design, manufacture, and sale 
of reconditioned EOCCs is a separate and distinct line of commerce and 
a relevant product market for the purpose of analyzing the effects of 
the acquisition under Section 7 of the Clayton Act and Section 2 of the 
Sherman Act.
B. The Relevant Geographic Market
    21. All EOCCs in the United States are designed, manufactured, and 
sold in the United States. Amsted sells, and FMI sold, EOCCs to 
customers located throughout the United States.
    22. The United States is the relevant geographic market for 
purposes of analyzing the effects of the acquisition under Section 7 of 
the Clayton Act and Section 2 of the Sherman Act.
C. Anticompetitive Effects
    23. Before Amsted's acquisition of FMI, the markets for EOCCs were 
highly concentrated. For new EOCCs, the merging entities were the only 
two suppliers. For reconditioned EOCCs, the market was limited to three 
suppliers, and the merging parties had a combined market share of over 
80%. The markets became substantially more concentrated following the 
acquisition. Using the Herfindahl-Hirschman Index (``HHI''), an 
explanation of which appears in Appendix A attached hereto, the 
transaction resulted in a post-merger concentration of over 7000 (an 
increase of over 2700) in the market for reconditioned EOCCs, while the 
consolidation in the market for new EOCCs resulted in a monopoly.
    24. Amsted and FMI directly constrained each other's prices, 
limiting overall price increases for new and reconditioned EOCCs 
despite significant materials cost increases. Before the transaction, 
Amsted created forecasts that contemplated significant price increases 
resulting from the merger. These price increases were aimed at 
achieving certain margin targets each year that would result in total 
additional profits of over $17 million during the first three years 
following the acquisition. According to the forecasts, achieving this 
goal would require an overall price increase of 4% in 2006, 10% in 
2007, and 5% in 2008, beyond increases in costs.
    25. Amsted pricing data shows that Amsted raised prices 
substantially following its acquisition of FMI. For new EOCCs, 
customers who did not have the pricing protection of long-term 
contracts paid on average approximately 14% more in February 2006 than 
they did in November 2005. For reconditioned EOCCs, customers without 
long-term contracts paid an average increase of approximately 5% during 
the same time period.
    26. Purchasers of new and reconditioned EOCCs in the United States 
benefitted from the vigorous and aggressive competition between Amsted 
and FMI through lower prices, higher quality, more innovation, and 
better service. Without the competitive constraint of head-to-head 
competition from FMI, Amsted has had and will continue to have the 
ability to exercise market power by raising prices, lowering product 
quality, decreasing services, and lessening product innovation.
    27. The acquisition by Amsted of FMI has removed a significant 
competitor in the already highly concentrated new and reconditioned 
EOCC markets. The resulting substantial increase in concentration and 
loss of competition has denied EOCC customers the benefits of 
competition, in violation of Section 7 of the Clayton Act and Section 2 
of the Sherman Act.
D. Entry Into the Production and Sale of New and Reconditioned EOCCs
    28. Entry into the design, manufacture, and sale of new or 
reconditioned EOCCs will not be timely, likely, or sufficient to 
counter the anticompetitive effects of the transaction. A new entrant 
to either market would require certifications and approvals from the 
Association of American Railroads (``AAR''), including facility 
certification and design certification for each EOCC model to be 
manufactured or reconditioned. Additionally, the AAR requires that a 
new entrant undergo a conditional approval period during which 
production is monitored and significantly limited.
    29. It is essential that a new entrant into either the new or 
reconditioned EOCC markets have sufficient technical know-how regarding 
the product in order to design and sell EOCCs. Thus, a new entrant must 
invest in significant design and engineering expertise in order to 
create the necessary tooling and intellectual property required to 
successfully manufacture new or reconditioned EOCCs according to AAR 
standards and railroad customer requirements.
    30. A new entrant into the new or reconditioned EOCC markets also 
must produce EOCCs in sufficient quantities and with sufficiently 
consistent quality to assure railroad customers that the new and 
reconditioned EOCCs will provide the necessary level of cushioning 
required to protect sensitive cargo. Achieving this quality reputation 
requires an additional investment in time and money by any new entrant.
    31. Although the manufacturing processes for new and reconditioned 
EOCCs are similar, both require unique inputs that are not readily 
available in the marketplace. For example, the manufacture of new EOCCs 
requires the use of patented designs and proprietary molds that are not 
needed in the reconditioning process. Similarly, the manufacture of 
reconditioned EOCCs requires the application of certain machining 
techniques and testing processes that are unique to the EOCC 
reconditioning market.
    32. Therefore, entry by any firm into the new or reconditioned EOCC 
markets would not be timely, likely, or sufficient to counter 
anticompetitive price increases imposed by Amsted.

VI. First Cause of Action (Violation of Section 7 of the Clayton Act)

    33. The United States incorporates the allegations of paragraphs 1 
through 32 above.
    34. On or about December 1, 2005, Amsted acquired FMI and its 
associated EOCC assets used in the manufacture of new and reconditioned 
EOCCs. The effect of this acquisition has been substantially to lessen 
competition in interstate trade and commerce in violation of Section 7 
of the Clayton Act.
    35. The transaction has had the following effects, among others:
    a. Competition in the new and reconditioned EOCC markets has been 
lessened substantially;
    b. Actual and potential competition between Amsted and FMI in the 
design, manufacture, and sale of new and reconditioned EOCCs in the 
United States has been eliminated; and

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    c. Prices for new and reconditioned EOCCs have increased and likely 
will continue to increase, the quality of EOCCs likely will decline, 
innovation relating to EOCCs likely will decline, and services 
currently offered in the EOCC markets have become and will continue to 
be less favorable to railroad customers.

Second Cause of Action (Violation of Section 2 of the Sherman Act)

    36. The United States incorporates the allegations of paragraphs 1 
through 32 above.
    37. On or about December 1, 2005, Amsted willfully created monopoly 
power by acquiring FMI, its only competitor in the manufacture and sale 
of new EOCCs. The effect of this acquisition has been to create a 
monopoly in violation of Section 2 of the Sherman Act.
    38. The transaction has had the following effects, among others:
    a. The combination created a monopoly for the sale of new EOCCs in 
the United States;
    b. Actual and potential competition between Amsted and FMI in the 
design, manufacture, and sale of new EOCCs in the United States has 
been eliminated; and
    c. Prices for new EOCCs have increased and likely will continue to 
increase, the quality of new EOCCs likely will decline, innovation 
relating to new EOCCs likely will decline, and services currently 
offered in the new EOCC market have become and will continue to be less 
favorable to railroad customers.

VII. Requested Relief

    39. The United States requests that this Court:
    a. Adjudge and decree the acquisition of FMI and its assets by 
defendant Amsted to violate Section 7 of the Clayton Act, 15 U.S.C. 18 
and Section 2 of the Sherman Act, 15 U.S.C. 2;
    b. Compel Amsted to divest all FMI EOCC intangible assets, in 
addition to all tools and patterns used for imparting the shape, form, 
or finish of EOCC components, and to take any further actions necessary 
to restore the market to the competitive position that existed prior to 
the acquisition;
    c. A ward the United States the cost of this action; and
    d. Grant the United States such other and further relief as the 
case requires and the Court deems just and proper.

     Respectfully submitted,

April 18, 2007.

For Plaintiff United States:

/s/--------------------------------------------------------------------
Gerald F. Masoudi Bar No. 466120,

Deputy Assistant Attorney General.

/s/--------------------------------------------------------------------
J. Robert Kramer II,

Director of Operations.

/s/--------------------------------------------------------------------
Maribeth Petrizzi Bar No. 435204,

Chief, Litigation II Section.

Dorothy B. Fountain Bar No. 439469,

Assistant Chief, Litigation II Section.

/s/--------------------------------------------------------------------
C. Scott Hataway Bar No. 473942,

Raven M. Norris,

Robert W. Wilder,

Attorneys U.S. Department of Justice Antitrust Division, Litigation 
II Section, 1401 H Street, NW., Suite 3000, Washington, DC 20530.

Appendix A--Herfindahl-Hirschman Index

    ``HHI'' means the Herfindahl-Hirschman Index, a commonly 
accepted measure of market concentration. It is calculated by 
squaring the market share of each firm competing in the market and 
then summing the resulting numbers. For example, for a market 
consisting of four firms with shares of thirty, thirty, twenty, and 
twenty percent, the HHI is 2600 (30\2\ + 30\2\ + 20\2\ + 20\2\ = 
2600). The HHI takes into account the relative size and distribution 
of the firms in a market and approaches zero when a market consists 
of a large number of firms of relatively equal size. The HHI 
increases both as the number of firms in the market decreases and as 
the disparity in size between those firms increases.
    Markets in which the HHI is between 1000 and 1800 points are 
considered to be moderately concentrated and those in which the HHI 
is in excess of 1800 points are considered to be highly 
concentrated. Transactions that increase the HHI by more than 100 
points in highly concentrated markets presumptively raise antitrust 
concerns under the Horizontal Merger Guidelines issued by the U.S. 
Department of Justice and the Federal Trade Commission. See 
Horizontal Merger Guidelines Sec.  1.51.

Final Judgment

    Whereas, plaintiff, United States of America, filed its Complaint 
on April 18, 2007, and the United States and defendant, Amsted 
Industries, Inc. (``Amsted''), by their respective attorneys, have 
consented to the entry of this Final Judgment without trial or 
adjudication of any issue of fact or law, and without this Final 
Judgment constituting any evidence against or admission by any party 
regarding any issue of fact or law;
    And whereas, Amsted agrees to be bound by the provisions of this 
Final Judgment pending its approval by the Court;
    And whereas, the essence of this Final Judgment is the prompt and 
certain divestiture of certain rights and assets by Amsted to assure 
that competition is substantially restored;
    And whereas, the United States requires Amsted to make certain 
divestitures, grant certain licenses, release all market participants 
of any Restrictive Covenants, and provide notification of any future 
transactions within 10 years of this Final Judgment for the purpose of 
remedying the lost competition alleged in the Complaint;
    And Whereas, Amsted has represented to the United States that the 
divestitures, license grants, release of Restrictive Covenants, and 
notification of future transactions, as required below, can and will be 
made and that Amsted will later raise no claim of hardship or 
difficulty as grounds for asking the Court to modify any of the 
divestiture provisions contained below;
    Now Therefore, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is Ordered, Adjudged and Decreed:

I. Jurisdiction

    This Court has jurisdiction over the subject matter of and each of 
the parties to this action. The Complaint states a claim upon which 
relief may be granted against Amsted under Section 7 of the Clayton 
Act, 15 U.S.C. 18, as amended, and Section 2 of the Sherman Act, 15 
U.S.C. 2.

II. Definitions

    As used in this Final Judgment:
    A. ``Amsted'' means defendant Amsted Industries, Inc., a Delaware 
corporation with its headquarters in Chicago, IL, its successors and 
assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.
    B. ``FMI'' means FM Industries, Inc., a Texas corporation and 
former subsidiary of Progress Rail, engaged in the development, 
production, and sale of EOCCs until it was acquired by Amsted on 
December 1, 2005.
    C. ``Progress Rail'' means Progress Rail Services Holding 
Corporation, a Delaware corporation with headquarters in Albertville, 
AL, its successors and assigns, and its subsidiaries, divisions, 
groups, affiliates, partnerships, and joint ventures, and their 
directors, officers, managers, agents and employees.
    D. ``EOCC'' means end-of-car cushioning unit, a hydraulic energy 
absorption device used to absorb and dissipate buff, draft, and 
coupling forces exerted on freight railcars.
    E. ``Acquirer'' means Wabtec Corporation, the entity to whom Amsted

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shall divest the Divested Assets and grant the Supplemental Asset 
License.
    F. ``Alternative Acquirer'' means the entity to whom Amsted shall 
divest the Divested Assets and grant the Supplemental Asset License in 
the event that the Acquirer is unable or unwilling to receive the 
Divested Assets or the Supplemental Asset License.
    G. ``Divested Assets'' means all FMI intangible assets owned or 
controlled by Amsted and all FMI tools and patterns owned or controlled 
by Amsted and used for imparting the shape, form, or finish to EOCC 
components, including:
    1. All detail and arrangement drawings, customer drawings, 
schematics, blueprints, designs, design validation testing reports, and 
design review notes;
    2. All specifications, manufacturing plans, assembly instructions, 
standard operating procedures, and work instructions related to the 
manufacturing process, including those related to tool speeds, feeds, 
special cutting tools, materials used, grinding and polishing, plating 
temperatures and processes, material thicknesses, seals, welding, and 
heat treatment;
    3. All dies, castings, patterns, molds, models, toolings, fixtures, 
jigs, and gages;
    4. All safety procedures and quality assurance documentation and 
instructions, including quality control plans, inspection frequency and 
criteria, work instructions, testing criteria, supplier manufacturing 
requirements, regulatory certifications, testing equipment 
specifications, surface finish instrument specifications, pressure/
leakage testing and specifications, gage specifications, product 
validation, qualification, acceptance, and rejection criteria, and all 
related empirical performance measurements, data, and reports;
    5. All supplier contact lists, customer contact lists, material 
lists, materials safety data sheets, substitute material lists, 
historic pricing and sales volume information, customer complaints, 
product serialization data, warranty information, product failure 
reports, market analyses, and all contracts, agreements, leases, 
commitments, or understandings with suppliers or customers;
    6. All intellectual property (``IP'') assets or rights that have 
been used in the development, production, servicing, and sale of EOCCs, 
including but not limited to the names ``FMI,'' ``FM Industries,'' and 
``Freight Master,'' all patents, including FMI's patented active draft 
technology (U.S. patent number 6,237,733 ``Internal neutral Positioning 
Spring''), all licenses, rights, and sublicenses, trademarks, trade 
names, service marks, service names, technical information, computer 
software and related documentation, know-how, trade secrets, approvals, 
certifications, advertising literature, and all manuals and technical 
information provided to the employees, customers, suppliers, agents, or 
licensees of FMI; and
    7. All research data concerning historic and current research and 
development efforts, including designs of experiments, and the results 
of unsuccessful designs and experiments relating to the production and 
design of EOCCs.

Among the Divested Assets, the divestiture of U.S. Patent number 
6,237,733 ``Internal Neutral Positioning Spring'' will be transferred 
subject to a perpetual, royalty-free license to Amsted.

    H. ``Person'' means any natural person, corporate entity, 
partnership, association, joint venture, government entity, or trust.
    I. ``Restrictive Covenants'' means all agreements, contracts, 
understandings, or arrangements between Amsted and any other person 
restricting competition in the development, production, and sale of 
EOCCs, including non-compete agreements between Amsted and former FMI 
employees; non-compete agreements between Amsted and current or former 
Amsted employees; and any exclusivity arrangements between Amsted and 
any of its suppliers or customers. The term Restrictive Covenants does 
not include Section 8.7 ``Post-Closing Non-Compete'' of Amsted's Asset 
Purchase Agreement with Progress Rail dated December 1, 2005. The term 
Restrictive Covenants does not include agreements between Amsted and 
Amsted's current and former employees to the extent those agreements 
prevent the disclosure of confidential information.
    J. ``Supplemental Asset License'' means a perpetual royalty-free 
license to and copy of all Amsted's intangible assets used in the 
development, production, or sale of EOCCs, and a limited license to use 
certain Amsted tangible assets used in the development, production, or 
sale of EOCCs, including:
    1. All detail and arrangement drawings, customer drawings, 
schematics, blueprints, designs, design validation testing reports, and 
design review notes;
    2. All specifications, manufacturing plans, assembly instructions, 
standard operating procedures, and work instructions related to the 
manufacturing process, including those related to tool speeds, feeds, 
special cutting tools, materials used, grinding and polishing, plating 
temperatures and processes, material thicknesses, seals, welding, and 
heat treatment;
    3. The use for two (2) years of all Amsted-owned or controlled 
dies, castings, patterns, molds, models, toolings, fixtures, jigs, and 
gages employed by Amsted suppliers in the production of EOCC 
components;
    4. All safety procedures and quality assurance documentation and 
instructions, including quality control plans, inspection frequency and 
criteria, work instructions, testing criteria, supplier manufacturing 
requirements, testing equipment specifications, surface finish 
instrument specifications, pressure/leakage testing and specifications, 
gage specifications, product validation, qualification, acceptance, and 
rejection criteria, and all related empirical performance measurements, 
data, and reports; and
    5. Amsted's patented active draft technology, U.S. Patent number 
6,357,612 ``Rail Car Cushioning Device;''

The term ``Supplemental Asset License'' shall not include tangible or 
intangible assets exclusively used in the production or sale of 
products other than EOCCs, and also shall not include Amsted cost data, 
price data, revenue data, research and development information, or 
customer contract information.

III. Applicability

    A. This Final Judgment applies to Amsted, as defined above, and all 
other persons in active concert or participation with it who receive 
actual notice of this Final Judgment by personal service or otherwise.
    B. Amsted shall require, as a condition of the sale or other 
disposition of all or substantially all of their assets or of lesser 
business units that include the Divested Assets, or the assets 
underlying the Supplemental Asset License, that the purchaser will 
agree to be bound by the provisions of this Final Judgment.

IV. Divestiture

    A. Amsted is hereby ordered and directed, within sixty (60) 
calendar days after the filing of the Complaint in this matter, or five 
(5) days after notice of the entry of this Final Judgment by the Court, 
whichever is later, to divest the Divested Assets and grant the 
Supplemental Asset License to the Acquirer, all in a manner consistent 
with this Final Judgment. The United States, in its sole discretion, 
may agree to one or more extensions of this time period not to exceed 
sixty (60) days in

[[Page 21291]]

total, and shall notify the Court in such circumstances. Amsted agrees 
to use its best efforts to divest the Divested Assets and grant the 
Supplemental Asset License as expeditiously as possible. Amsted also 
agrees that it shall receive no compensation or anything of value for 
divesting the Divested Assets or granting the Supplemental Asset 
License pursuant to this Final Judgment.
    B. In accomplishing the divestiture and licenses ordered by this 
Final Judgment, Amsted promptly shall inform the Acquirer that the 
Divested Assets and Supplemental Asset License are being conveyed 
pursuant to this Final Judgment and provide the Acquirer a copy of this 
Final Judgment. Amsted shall offer to furnish to the Acquirer, subject 
to customary confidentiality assurances, all information and documents 
relating to the Divested Assets and Supplemental Asset License 
customarily provided in a due diligence process, except such 
information or documents subject to the attorney-client or work-product 
privileges. Amsted shall make available such information to the United 
States at the same time that such information is made available to any 
other person.
    C. Amsted shall permit the Acquirer to have reasonable access to 
personnel and to any and all financial, operational, or other documents 
and information customarily provided as part of a due diligence 
process. Amsted shall provide information giving the identity and 
function of the personnel involved in the operation and management of 
both Amsted and FMI to enable the Acquirer to make offers of 
employment. Amsted will not interfere with any negotiations by the 
Acquirer to employ any Amsted employee.
    D. Amsted shall unilaterally release all persons from any 
Restrictive Covenants related to the production, development, or sale 
of EOCCs. If after one year from the entry of this Final Judgment, the 
Acquirer has failed to deliver an EOCC manufactured or reconditioned by 
the Acquirer to a railroad industry customer, Amsted shall also 
unilaterally release Progress Rail from Section 8.7 of Amsted's Asset 
Purchase Agreement with Progress Rail dated December 1, 2005 (''Post-
Closing Non-Compete'').
    E. Amsted shall preserve and maintain the Divested Assets and the 
assets licensed under the Supplemental Asset License and shall not 
license, transfer, encumber, or otherwise impair the value of such 
assets while the divestiture is pending.
    F. Amsted shall use commercially reasonable efforts to facilitate 
the transfer of EOCC cores from Amsted's facilities at the request of 
railroad customers. Amsted shall take no action the effect of which is 
to interfere with or impede the transfer of EOCC cores owned by 
railroad customers to the Acquirer or the ability of the Acquirer to 
compete effectively in the sale of reconditioned EOCCs.
    G. Amsted shall not take any action that will impede in any way the 
permitting, operation, or divestiture of the Divested Assets or 
Supplemental Asset License.
    H. Unless the United States otherwise consents in writing, the 
divestiture pursuant to Section IV of this Final Judgment shall include 
the entire Divested Assets and Supplemental Asset License, and shall be 
accomplished in such a way as to satisfy the United States, in its sole 
discretion, that the Divested Assets and Supplemental Asset License can 
and will be used by the Acquirer as part of an economically viable, 
ongoing business engaged in the production and sale of EOCCs in the 
United States. The divestiture shall be accomplished so as to satisfy 
the United States, in its sole discretion, that:
    1. The Divestiture Assets and Supplemental Asset License will 
remain viable and that the divestiture will remedy the competitive harm 
alleged in the Complaint; and
    2. None of the terms of any agreement between the Acquirer and 
Amsted gives Amsted the ability unreasonably to raise the Acquirer's 
costs, to lower the Acquirer's efficiency, or otherwise to interfere in 
the ability of the Acquirer to compete effectively in the production 
and sale of EOCCs.

V. Appointment of Trustee To Effect Divestiture

    A. In the event that the Acquirer is unable or unwilling to receive 
the Divested Assets and Supplemental Asset License, Amsted shall notify 
the United States of that fact in writing. Upon application of the 
United States, the Court shall appoint a trustee selected by the United 
States and approved by the Court to effect the divestiture of the 
Divested Assets and the grant of the Supplemental Asset License in a 
manner consistent with this Final Judgment to an Alternative Acquirer 
approved by the United States in its sole discretion.
    B. Amsted shall use commercially reasonable efforts to facilitate 
the transfer of EOCC cores from Amsted's facilities at the request of 
railroad customers. Amsted shall take no action the effect of which is 
to interfere with or impede the transfer of EOCC cores owned by 
railroad customers to the Alternative Acquirer or the ability of the 
Alternative Acquirer to compete effectively in the sale of 
reconditioned EOCCs.
    C. Unless the United States otherwise consents in writing, the 
divestiture pursuant to Section V of this Final Judgment shall include 
the entire Divested Assets and Supplemental Asset License, and shall be 
accomplished in such a way as to satisfy the United States, in its sole 
discretion, that the Divested Assets and Supplemental Asset License can 
and will be used by the Alternative Acquirer as part of an economically 
viable, ongoing business engaged in the production and sale of EOCCs in 
the United States. The divestiture shall be accomplished so as to 
satisfy the United States, in its sole discretion, that:
    1. The Alternative Acquirer has the intent and capability 
(including the necessary managerial, operational, technical, and 
financial capability) to compete effectively in the production and sale 
of EOCCs;
    2. None of the terms of any agreement between the Alternative 
Acquirer and Amsted gives Amsted the ability unreasonably to raise the 
Alternative Acquirer's costs, to lower the Alternative Acquirer's 
efficiency, or otherwise to interfere in the ability of the Alternative 
Acquirer to compete effectively in the production and sale of EOCCs; 
and
    3. The Divested Assets and Supplemental Asset License will remain 
economically viable and the divestiture will remedy the competitive 
harm alleged in the Complaint.
    D. After the appointment of a trustee becomes effective, only the 
trustee shall have the right to convey the Divested Assets and 
Supplemental Asset License. The trustee shall have the power and 
authority to accomplish the divestiture to an Alternative Acquirer 
approved by the United States, subject to the provisions of Sections 
IV, V, and VI of this Final Judgment, and shall have such other powers 
as this Court deems appropriate. The divestiture of the Divested Assets 
and the grant of the Supplemental Asset License shall be made without 
any cost to the Alternative Acquirer or any compensation to Amsted. 
Subject to Section V(E) of this Final Judgment, the trustee may hire at 
the cost and expense of Amsted any investment bankers, attorneys, 
accountants, or any other agents and outside contractors who shall be 
solely accountable to the trustee, reasonably necessary in the 
trustee's judgment to assist in the divestiture.

[[Page 21292]]

    E. Amsted shall not object to a grant or conveyance by the trustee 
on any ground other than the trustee's malfeasance. Any such objections 
by Amsted must be in writing to the United States and the trustee 
within ten (10) calendar days after the trustee has provided the notice 
required under Section VI.
    F. The trustee shall serve at the cost and expense of Amsted, on 
such terms and conditions as the United States approves, and shall 
account for all costs incurred from the conveyance of the Divested 
Assets and Supplemental Asset License. The compensation of the trustee 
and any professionals and agents retained by the trustee shall be 
reasonable in light of the fair market value of the Divested Assets and 
Supplemental Asset License, and based on a fee arrangement providing 
the trustee with an incentive based on the speed with which the 
divestiture is accomplished.
    G. Amsted shall use its best efforts to assist the trustee in 
accomplishing the required divestiture. The trustee and any 
consultants, accountants, attorneys, and other persons retained by the 
trustee shall have full and complete access to the personnel, books, 
records, and facilities relating to the assets to be divested, and the 
Supplemental Asset License; and Amsted shall develop financial and 
other information relevant to such business as the trustee may 
reasonably request, subject to customary confidentiality protection. 
Amsted shall take no action to interfere with or to impede the 
trustee's accomplishment of the divestiture.
    H. After appointment, the trustee shall file monthly reports with 
the United States and the Court setting forth the trustee's efforts to 
accomplish the divestiture ordered under this Final Judgment. To the 
extent such reports contain information that the trustee deems 
confidential, such reports shall not be filed in the public docket of 
the Court. Such reports shall include the name, address, and telephone 
number of each person who, during the preceding month, made an offer to 
acquire, expressed an interest in acquiring, entered into negotiations 
to acquire, or was contacted or made an inquiry about acquiring, any 
interest in the Divested Assets or Supplemental Asset License and shall 
describe in detail each contact with any such person. The trustee shall 
maintain full records of all efforts made to divest the Divested Assets 
or grant the Supplemental Asset License.
    I. If the trustee has not accomplished such divestiture within six 
(6) months after its appointment, the trustee shall promptly file with 
the Court a report setting forth (1) the trustee's efforts to 
accomplish the required divestiture; (2) the reasons, in the trustee's 
judgment, why the required divestiture has not been accomplished; and 
(3) the trustee's recommendations. To the extent such reports contain 
information that the trustee deems confidential, such reports shall not 
be filed in the public docket of the Court. The trustee shall at the 
same time furnish such report to the United States who shall have the 
right to make additional recommendations consistent with the purpose of 
the trust. The Court thereafter shall enter such orders as it shall 
deem appropriate to carry out the purpose of the Final Judgment, which 
may, if necessary, include extending the trust and the term of the 
trustee's appointment by a period requested by the United States.

VI. Notice of Proposed Divestiture

    A. Within two (2) business days following execution of a definitive 
divestiture agreement, the trustee shall notify the United States and 
Amsted of any proposed divestiture required by Section V of this Final 
Judgment. The notice shall set forth the details of the proposed 
divestiture and grant of the Supplemental Asset License, and list the 
name, address, and telephone number of each person not previously 
identified who offered or expressed an interest in or desire to acquire 
any ownership interest in the Divested Assets or the Supplemental Asset 
License together with full details of the same.
    B. Within fifteen (15) calendar days of receipt by the United 
States of such notice, the United States may request from Amsted, the 
proposed Alternative Acquirer, any other third party, or the trustee if 
applicable, additional information concerning the proposed divestiture, 
the proposed Alternative Acquirer, and any other potential Alternative 
Acquirer. Amsted and the trustee shall furnish any additional 
information requested within fifteen (15) calendar days of the receipt 
of the request, unless the parties shall otherwise agree.
    C. Within (a) thirty (30) calendar days after receipt of the notice 
or (b) twenty (20) calendar days after the United States has been 
provided the additional information requested from Amsted, the proposed 
Alternative Acquirer, any third party, or the trustee, whichever is 
later, the United States shall provide written notice to Amsted and the 
trustee stating whether or not it objects to the proposed divestiture. 
If the United States provides written notice that it does not object, 
the divestiture may be consummated, subject only to Amsted's limited 
right to object to the conveyance under Section V(E) of this Final 
Judgment. Absent written notice that the United States does not object 
to the proposed Alternative Acquirer or upon objection by the United 
States, the divestiture proposed under Section V shall not be 
consummated. Upon objection by Amsted under Section V(E), the 
divestiture proposed under Section V shall not be consummated unless 
approved by the Court.

VII. Financing

    Amsted shall not finance all or any part of any purchase or 
divestiture made pursuant to Section IV or V of this Final Judgment.

VIII. Hold Separate

    Until the divestiture required by this Final Judgment has been 
accomplished, Amsted shall take all steps necessary to comply with the 
Hold Separate Stipulation and Order entered by this Court. Amsted shall 
take no action that would jeopardize the divestiture ordered by this 
Court.

IX. Affidavits

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, and every thirty (30) calendar days thereafter until 
the divestiture has been completed under Section IV or V, Amsted shall 
deliver to the United States an affidavit as to the fact and manner of 
its compliance with Section IV or V of this Final Judgment. Each such 
affidavit shall describe in detail each contact with any person who, 
during the preceding thirty (30) days, made an offer to acquire, 
expressed an interest in acquiring, entered into negotiations to 
acquire, or was contacted or made an inquiry about acquiring, any 
interest in the Divested Assets or Supplemental Asset License including 
the Acquirer or any potential Alternative Acquirer. Each such affidavit 
shall also include a description of the efforts Amsted has taken to 
convey the Divested Assets and Supplemental Asset License, and to 
provide required information to the Acquirer, including the 
limitations, if any, on such information. Assuming the information set 
forth in the affidavit is true and complete, any objection by the 
United States to information provided by Amsted, including limitations 
on the information, shall be made within fourteen (14) calendar days of 
receipt of such affidavit.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, Amsted shall deliver to the United States an affidavit 
that describes all actions Amsted has taken and all

[[Page 21293]]

steps Amsted has implemented on an ongoing basis to comply with Section 
VIII of this Final Judgment. Amsted shall deliver to the United States 
an affidavit describing any changes to the efforts and actions outlined 
in Amsted's earlier affidavits filed pursuant to this section within 
fifteen (15) calendar days after the change is implemented.
    C. Amsted shall keep all records of all efforts made to preserve 
the Divested Assets and to convey the Divested Assets and Supplemental 
Asset License until one year after such divestiture has been completed.

X. Compliance Inspection

    A. For the purpose of determining or securing compliance with this 
Final Judgment, or of determining whether the Final Judgment should be 
modified or vacated, and subject to any legally recognized privilege, 
from time to time duly authorized representatives of the United States 
Department of Justice, including consultants and other persons retained 
by the United States, shall, upon written request of a duly authorized 
representative of the Assistant Attorney General in charge of the 
Antitrust Division, and on reasonable notice to Amsted, be permitted:
    1. Access during Amsted's office hours to inspect and copy, or at 
the United States' option, to require Amsted to provide copies of, all 
books, ledgers, accounts, records and documents in the possession, 
custody, or control of Amsted, relating to any matters contained in 
this Final Judgment; and
    2. To interview, either informally or on the record, Amsted's 
officers, employees, or agents, who may have their individual counsel 
present, regarding such matters. The interviews shall be subject to the 
reasonable convenience of the interviewee and without restraint or 
interference by Amsted.
    B. Upon the written request of a duly authorized representative of 
the Assistant Attorney General in charge of the Antitrust Division, 
Amsted shall submit written reports, under oath if requested, relating 
to any of the matters contained in this Final Judgment as may be 
requested.
    C. No information or documents obtained by the means provided in 
this section shall be divulged by the United States to any person other 
than an authorized representative of the executive branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party (including grand jury proceedings), or for the 
purpose of securing compliance with this Final Judgment, or as 
otherwise required by law.
    D. If at the time information or documents are furnished by Amsted 
to the United States, Amsted represents and identifies in writing the 
material in any such information or documents to which a claim of 
protection may be asserted under Rule 26(c)(7) of the Federal Rules of 
Civil Procedure, and Amsted marks each pertinent page of such material, 
``Subject to claim of protection under Rule 26(c)(7) of the Federal 
Rules of Civil Procedure,'' then the United States shall give Amsted 
ten (10) calendar days notice prior to divulging such material in any 
legal proceeding (other than a grand jury proceeding).

XI. Notification of Future Transactions

    A. Unless such transaction is otherwise subject to the reporting 
and waiting period requirements of the Hart-Scott-Rodino Antitrust 
Improvements Act of 1976, as amended, 15 U.S.C. 18a (the ``HSR Act''), 
Amsted shall not, without notifying the United States, directly or 
indirectly acquire any assets of or any interest, including any 
financial, security, loan, equity, or management interest, in the 
development, production, or sale of EOCCs in the United States if the 
value of such acquisition exceeds $1,000,000. This notification 
requirement shall run for a period of ten years.
    B. Such notification shall be provided to the United States in the 
same format as, and per the instructions relating to, the Notification 
and Report Form set forth in the Appendix to Part 803 of Title 16 of 
the Code of Federal Regulations as amended, except that the information 
requested in Items 5 through 9 of the instructions must be provided 
only about EOCCs. Notification shall be provided at least thirty (30) 
days prior to acquiring any such assets or interest, and shall include, 
beyond what may be required by the applicable instructions, the names 
of the principal representatives of the parties to the agreement who 
negotiated the agreement, and any management or strategic plans 
discussing the proposed transaction. If within the 30-day period after 
notification, representatives of the United States make a written 
request for additional information, Amsted shall not consummate the 
proposed transaction or agreement until twenty (20) days after 
submitting all such additional information. Early termination of the 
waiting periods in this paragraph may be requested and, where 
appropriate, granted in the same manner as is applicable under the 
requirements and provisions of the HSR Act and rules promulgated 
thereunder. This Section shall be broadly construed and any ambiguity 
or uncertainty regarding the filing of notice under this Section shall 
be resolved in favor of filing notice.

XII. No Reacquisition

    Amsted may not reacquire any part of the Divested Assets or any 
right, title or interest in the Supplemental Asset License during the 
term of this Final Judgment.

XIII. Retention of Jurisdiction

    This Court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

XIV. Expiration of Final Judgment

    Unless this Court grants an extension, this Final Judgment shall 
expire ten years from the date of its entry.

XV. Public Interest Determination

    Entry of this Final Judgment is in the public interest. The parties 
have complied with the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16, including making copies available to the 
public of this Final Judgment, the Competitive Impact Statement, and 
any comments thereon and the United States' responses to comments. 
Based upon the record before the Court, which includes the Competitive 
Impact Statement and any comments and response to comments filed with 
the Court, entry of this Final Judgment is in the public interest.

Date:------------------------------------------------------------------

Court approval subject to procedures of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16.

-----------------------------------------------------------------------

United States District Judge.

Competitive Impact Statement

    Plaintiff United States of America (``United States''), pursuant to 
Section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or 
``Tunney Act''), 15 U.S.C. 16(b)-(h), files this Competitive Impact 
Statement relating to the proposed Final Judgment submitted for entry 
in this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

    This case was brought because Defendant Amsted Industries, Inc. 
(``Amsted'') acquired all of the assets of

[[Page 21294]]

FM Industries, Inc. (``FMI''), a business unit of Progress Rail 
Services Holding Corporation, Inc. (``Progress Rail'').\1\ On April 25, 
2006, Amsted dismantled FMI by firing its employees and disposing of 
virtually all FMI plant equipment through an auction. The United States 
filed a civil antitrust Complaint on April 18, 2007, alleging that the 
acquisition lessened competition substantially for the design, 
manufacture, and sale of new and reconditioned end-of-car cushioning 
units (``EOCCs'') in violation of Section 7 of the Clayton Act, 15 
U.S.C. 18, and Section 2 of the Sherman Act, 15 U. S. C. 2. This loss 
of competition has impacted the rail industry through higher prices, 
reduced services, and decreased innovation.
---------------------------------------------------------------------------

    \1\ Progress Rail was subsequently acquired by Caterpillar Inc. 
on May 16, 2006.
---------------------------------------------------------------------------

    At the same time the Complaint was filed, the United States also 
filed a Hold Separate Stipulation and Order and proposed Final 
Judgment, which are designed to eliminate the anticompetitive effects 
of the acquisition. Under the proposed Final Judgment, Amsted is 
required to divest without compensation all intellectual property and 
other intangible assets that it acquired from Progress Rail. In 
addition, Amsted is required to grant a perpetual, royalty-free license 
to certain Amsted-generated intellectual property and notify the United 
States of future acquisitions related to EOCCs. Under the terms of the 
Hold Separate Stipulation and Order, Amsted will take steps to ensure 
that the divested assets remain economically viable during the pendency 
of the ordered divestiture.
    The United States and the defendant have stipulated that the 
proposed Final Judgment may be entered after compliance with the APPA. 
Entry of the proposed Final Judgment would terminate this action, 
except that the Court would retain jurisdiction to construe, modify, or 
enforce the provisions of the proposed Final Judgment and to punish 
violations thereof.

II. Description of the Events Giving Rise to the Alleged Violation

A. The Parties to the Consummated Transaction
    Amsted is a diversified manufacturer of industrial components for 
the railroad, vehicular, and construction markets. Its products include 
a range of railroad car parts, including couplers, side frames, 
bolsters, draft gears; and EOCCs. Amsted's EOCC sales in the United 
States are made through its wholly owned subsidiary, ASF-Keystone. ASF-
Keystone is a Delaware corporation with its principal place of business 
in Granite City, IL.
    Progress Rail, a wholly owned subsidiary of Caterpillar, Inc., is 
one of the largest suppliers of new and reconditioned railroad car 
parts, rail and trackwork components, and railroad car repair services 
to the railroad industry in the United States. Progress Rail's EOCC 
sales in the United States were made through its wholly owned 
subsidiary, FMI, formerly a Texas corporation with its principal place 
of business and EOCC manufacturing facility in Fort Worth, Texas.
    Prior to the merger, Amsted and FMI were the only two manufacturers 
of new EOCCs and two of only three manufacturers of reconditioned 
EOCCs. The transaction lessened competition substantially for these 
products. As a result, prices for new and reconditioned EOCCs have 
increased and likely will continue to increase, the quality of EOCCs 
likely will decline, innovation relating to EOCCs likely will decline, 
and services currently offered in the EOCC markets have become and will 
continue to be less favorable to railroad customers.
B. The Relevant Product Market: End-of-Car Cushioning Units
    Railroad freight cars undergo considerable stress during transit 
due to longitudinal forces known as draft and buff forces. Draft forces 
are pulling forces caused by train acceleration when freight cars are 
stretched or pulled apart. Buff forces are compressive forces caused by 
train deceleration when freight cars are pushed together. If not 
absorbed and dissipated, the energy from draft and buff forces can 
cause considerable damage to both car and cargo. Freight cars also 
undergo considerable stress during switching and coupling at train 
depots. In order for a railroad to connect one freight car to another, 
it must collide the cars at significant speed. The impact sustained 
during switching and coupling, like draft and buff forces, can cause 
serious damage to sensitive cargo inside a freight car.
    Railroads must equip all freight cars with energy absorption 
devices to mitigate the effects of draft, buff, and coupling stresses. 
The most common device is known as a draft gear, which provides the 
minimum protection required for safe railroad operation. Draft gears 
rely on friction between two steel plates to absorb and dissipate the 
energy created by longitudinal forces impacting the freight car. 
Another type of device is commonly referred to as an ``elastomeric'' 
device. These devices use an elastic substance (e.g., rubber) and steel 
coils to absorb the draft, buff, and coupling stresses. Elastomeric 
devices are lightweight and low cost, but they are not suitable for all 
applications as they return much of the absorbed energy back into the 
draft system. Neither draft gears nor elastomers are sufficient to 
protect sensitive cargos.
    When transporting sensitive cargos in traditional freight cars, 
railroads must use EOCCs to absorb and dissipate the maximum buff, 
draft, and coupling forces. These devices use hydraulics (e.g., 
pressurized nitrogen gas and oils) to minimize longitudinal forces and 
ensure that sensitive cargo is not damaged during transit. Each EOCC 
unit consists of a piston, shaft, cylinder, end bells, and a rod that 
attaches the piston to the freight car coupler. Each EOCC-equipped 
freight car requires two EOCCs, one at each end of the freight car. 
EOCCs are critical components for freight cars carrying sensitive 
commodities, such as steel products, automobile products, electronics, 
lumber, and paper products. Other energy absorption devices, such as 
draft gears and elastomeric devices, do not provide the necessary level 
of cushioning required by customers shipping sensitive goods on freight 
cars. Railroads and new freight car builders do not consider prices or 
availability of draft gears or elastomeric devices when soliciting 
prices for EOCCs from prospective suppliers.
    Though sensitive cargos can be transported by ``intermodal'' 
freight cars with articulated connectors, railroads cannot substitute 
intermodal transportation for freight cars equipped with EOCCs, 
Intermodal freight cars are specially designed railcars that allow 
standard cargo containers to be stacked for rail transport. The cars 
must travel in groups connected by a ``slackless'' articulated coupling 
system. The coupling system transfers longitudinal forces to the ends 
of the intermodal group, protecting the containers from damage. Despite 
their suitability for certain applications, intermodal freight cars do 
not provide sufficient cushioning for some sensitive commodities, 
cannot physically transport certain sensitive commodities (such as 
automobiles and certain lumber products), and are typically much more 
expensive to own and operate than freight cars equipped with EOCCs. The 
intermodal groups must also travel to the same destination due to their 
slackless connection. Because of these additional costs and operational 
constraints, intermodal rail transportation in North America tends to 
be most economical for large shipments manufactured outside of

[[Page 21295]]

North America and imported by sea. When soliciting prices for EOCCs 
from prospective suppliers, railroad customers do not consider the cost 
of transporting goods using intermodal freight cars with articulated 
connectors.
    Railroad customers may use either new or reconditioned EOCCs when 
equipping freight cars. However, customers building new freight cars 
are almost always required to use only new EOCCs in construction. 
Though higher cost, these new units are highly durable and invariably 
protected by an industry standard ten-year warranty. The vast majority 
of customers building new freight cars would be unable to use